Once a buyer asks for exclusivity, the negotiation changes shape. You stop talking to other buyers, the clock starts on due diligence, and your bargaining position weakens. Everything you wanted to test, you needed to test before you signed exclusivity. The questions are designed so the answers are short, comparable across buyers, and uncomfortable for any buyer who is not what they claim to be.
Print this. Take it to the second meeting. Ask the questions in order. Write the answers down. Compare across buyers afterwards.
Contents
- Why screen before exclusivity
- 1. What does your completed track record look like?
- 2. Where is the completion payment coming from?
- 3. What happens to my staff in years one to three?
- 4. What is your software migration policy?
- 5. What is your fee harmonisation policy?
- 6. How does your retention test actually work?
- 7. How long do you need me involved after completion?
- 8. Who signs the SPA on your side?
- 9. Who handles client introductions in the first ninety days?
- 10. What would make you walk away?
- Scoring the answers
- What to do today
Why screen before exclusivity
Exclusivity is the moment in any practice sale when the buyer's incentive shifts. Up to that point they are competing for your attention. After it, they have between thirty and ninety days where you cannot speak to anyone else, and the temptation to renegotiate downwards on the back of due diligence findings is real. Buyers who are honest about their constraints before exclusivity tend to behave the same way after it. Buyers who give you smooth, evasive answers up front tend to find reasons to chip the price once you are committed.
None of these questions are clever. They are the questions a competent solicitor would ask if you let one sit in the second meeting, which is rarely commercial. The point of writing them down is to ask them yourself, in the same form, of every buyer, and to compare what you hear back.
1. What does your completed track record look like?
The question. "How many practices have you actually bought and integrated, and can I speak to one of those sellers?"
Why it matters. A buyer who has never completed an acquisition is asking you to be their training run. A buyer who has completed twenty in three years is running a roll-up where your practice is one item on a spreadsheet. Both extremes carry risk, and the risks are different.
What a good answer looks like. A specific number, the years they were completed, a willingness to put you in touch with at least one previous seller. For a chartered-firm buyer, low numbers are fine if they reflect deliberate selectivity. For a PE consolidator, high numbers should come with a story about how integration is staffed, not just acquisition.
What a bad answer signals. "We've been in conversations with many practices" is not an answer. "We can't share details for confidentiality reasons" is not an answer either, because the previous seller can choose to speak; the buyer is hiding behind a confidentiality they do not own.
Where we sit. An independent chartered firm with operational headroom to take on a small acquired book alongside our existing practice. One acquisition completed in the last decade. The selectivity is intentional, not a queue we have failed to build; we are open to one more, on the right fit, and capacity is in place to do it well. If sheer volume of completed deals is your single most important screening criterion, a PE-backed consolidator will out-score us on this one.
2. Where is the completion payment coming from?
The question. "Is the 50 per cent on completion coming from cash on your balance sheet, from a committed bank facility, or from drawdown of an external funding line?"
Why it matters. Completion delays of four to twelve weeks because the buyer's funding "is just being arranged" are common. So is the renegotiation that follows, where the buyer claims their funder has questions about a particular client concentration or a fee-trajectory wobble, and the cash component shrinks. Knowing in advance where the money is coming from tells you whether the deal completes on the day it is supposed to.
What a good answer looks like. Either "from our own reserves, here is comfort from our bank that the funds are sitting there" or "from a committed term loan, here is a redacted facility letter with the lender named". The buyer should be willing to evidence this before exclusivity, not after.
What a bad answer signals. "Funding is in place" without a source named, or a source that depends on the deal itself (asset-backed lending against the book you are selling). Buyers funding the completion payment from the asset they are buying are inherently fragile.
Where we sit. Completion payments come from the firm's own balance sheet, not from a fund, a syndicate, or a deal-by-deal external loan. Statutory accounts filed at Companies House are publicly verifiable evidence of the working-capital position.
3. What happens to my staff in years one to three?
The question. "What does your standard SPA say about staff continuity, redundancy, salary, and pension over the first three years?"
Why it matters. This is the question that keeps most retiring principals awake. The answer should be specific enough to compare across buyers. Vague reassurance is not a clause.
What a good answer looks like. A 12-month no-redundancy minimum, salary parity protected, pension scheme either continued or matched, role mapping done before completion. Ideally with the actual SPA wording shared on request.
What a bad answer signals. "Of course we value your team" is not a clause. "Subject to operational review" means redundancies are coming. "We typically retain key staff" means the rest are not retained.
Where we sit. Our standard SPA includes a 12-month no-redundancy commitment, salary parity, and a written role-mapping document done before completion. The full clause language is shared on request.
4. What is your software migration policy?
The question. "If my clients are on Xero, IRIS, CCH, or whatever, do they have to migrate to your stack, and if so, on what timeline and at whose cost?"
Why it matters. Forced software migration is the single most common cause of client attrition in the second year. It is also the single most common consolidator behaviour. Cloud accounting platforms are not interchangeable, and a small business that has spent three years getting comfortable with Xero does not want to learn QuickBooks because the new owner has a group licensing deal.
What a good answer looks like. "We match what your clients are already on. If a client wants to migrate later, that is a separate conversation with them."
What a bad answer signals. "We standardise on Platform X within twelve to eighteen months" means client churn in years two and three, which the retention test may or may not capture depending on how it is drafted.
Where we sit. We match the existing software stack. We use a mixed environment in our own practice precisely because clients arrive on whichever platform suits them, and we do not require them to change.
5. What is your fee harmonisation policy?
The question. "How do you handle fee differences between my clients and yours, and on what timeline?"
Why it matters. Many consolidators run a "harmonisation" exercise in years two and three where the acquired firm's fees are gradually raised to the consolidator's standard rate. Clients who were paying you £1,800 a year for a small limited-company set find themselves at £2,800 within eighteen months. This is the second commonest cause of client attrition after software migration.
What a good answer looks like. "Existing fees are honoured for at least the first 12 months. Any subsequent change is a normal renewal-cycle conversation between the partner and the client, not a harmonisation programme."
What a bad answer signals. "We bring fees into line with the rest of the group over time" is the same answer dressed differently. Ask for the policy in writing.
Where we sit. No harmonisation programme. Fees are set on a normal renewal cycle, client by client, partner by partner, based on the work being done.
6. How does your retention test actually work?
The question. "Walk me through the retention test mechanics. What is the threshold, what is included, what is excluded, and what happens if it is missed?"
Why it matters. Retention tests are where buyer-friendly drafting can quietly remove twenty per cent of the price. The threshold matters less than what counts as "lost". Does a client who reduced their fee from £4k to £2k count as retained or partially lost? Does a client who switched within the first six months count, or only those who switched after?
What a good answer looks like. A single threshold (typically 80 to 90 per cent of the acquired recurring fee base), measured at a defined date (typically 12 to 24 months after completion), with clear inclusions and exclusions in the SPA. No clawback if the threshold is met.
What a bad answer signals. Sliding-scale clawbacks, multiple measurement dates, "fee retention" defined to include fee growth (so failing to grow counts as failing to retain), or any mechanism that allows the buyer to reclaim more than the deferred consideration itself. Push back on all of these.
Where we sit. Single 85 per cent threshold, measured at month 24 post-completion, applied only against the final 25 per cent tranche. No clawback against the cash-on-completion or the month-12 tranche, ever. The threshold is set well above what a careful introduction normally delivers.
7. How long do you need me involved after completion?
The question. "How many days a week, for how many months, and is the involvement paid or unpaid?"
Why it matters. Some buyers expect a five-year tail. Some expect ninety days. The difference is the difference between a clean exit and a five-year second job.
What a good answer looks like. A defined Transitional Services Agreement of around twelve weeks, tapering, with the seller's involvement clearly bounded. Anything longer should come with a paid consultancy arrangement separate from the purchase price.
What a bad answer signals. "We'd want you available informally for as long as it takes" is the language of an open-ended commitment.
Where we sit. Twelve-week TSA, three days a week tapering to one. Beyond month twelve, you are gone, with informal availability only for genuinely seller-specific historical questions.
8. Who signs the SPA on your side?
The question. "Is the buyer the same legal entity that has been in the conversation, and is the signatory the principal I have been speaking to?"
Why it matters. PE platforms commonly run the conversation through a polished M&A lead, then surface a holding company you have never heard of for the SPA itself, with a signatory who has no operational connection to your practice afterwards. The contract is with the holding company; the relationship was with someone else.
What a good answer looks like. The named firm, signed by a principal who will still be there in three years' time and who you can reach by phone.
What a bad answer signals. A SPV named after a gemstone or a Greek letter. An "acquisition vehicle" that has no trading history.
Where we sit. The buyer is Jack Ross Chartered Accountants. The SPA is signed by the Managing Partner, who is the same person on the call with you. There is no SPV between the conversation and the contract.
9. Who handles client introductions in the first ninety days?
The question. "Who from your side joins my top-client meetings in the weeks after completion?"
Why it matters. This tells you whether continuity is real or rhetorical. If the answer is "an account manager you have not met yet" or "a relationship director from the central team", clients will work it out within a meeting or two and the retention test result is already written.
What a good answer looks like. A named partner or senior person who is in the second meeting with you, and who is the partner the client will deal with from then on. Same person across all the top accounts.
What a bad answer signals. A central "client services" function. A rotating cast.
Where we sit. The partner who will look after the client is the partner in the introduction meeting, and is the partner who signs the engagement letter at the next renewal. Same person, throughout.
10. What would make you walk away?
The question. "What would you find in due diligence that would either kill the deal or trigger a renegotiation?"
Why it matters. A buyer who cannot answer this question is either dishonest or has not thought about it. Either is bad. The point of asking is to surface the renegotiation triggers before exclusivity, so they cannot be invented later.
What a good answer looks like. Specific triggers: undisclosed PII claim history, client concentration above a stated threshold, fee trajectory materially different from what was indicated, staff resignations between HoT and completion, material WIP write-offs not previously disclosed.
What a bad answer signals. "Nothing comes to mind" is dishonest. "We trust the process" is evasive. Push.
Where we sit. Our walkaway triggers are listed at HoT stage and do not change between then and completion. If something material is found that was not disclosed, we tell you what it is and what it means for the structure. We do not chip the price for things we found out about and did not raise.
Scoring the answers
Run all ten questions across every buyer at the same stage of the conversation, ideally between the second meeting and the day exclusivity is signed. Score each answer on three things:
- Specificity. Did they give you a number, a clause reference, or a name? Or did they give you a feeling?
- Documented backup. Did they offer to send the SPA wording, the funding letter, the previous seller's contact details? Or did they ask you to take it on trust?
- Consistency with what their actions suggest. Does the answer match the structure they have proposed and the behaviour they have shown so far?
A buyer who scores well on at least seven of ten is a buyer worth taking into exclusivity. A buyer who is evasive on four or more should not get exclusivity, regardless of headline price. The price they offer before exclusivity is the price they intend to renegotiate downwards once the clock is running.
What to do today
Before the second meeting with any buyer, two things are worth doing:
- Print this list. Bring it to the meeting. Tell the buyer at the start that you will work through ten standard questions and you will be doing the same with anyone else you talk to. Buyers behave better when they know they are being compared on identical criteria.
- Decide which three questions matter most to you. Staff continuity, software migration, retention test mechanics, and walkaway triggers tend to be the four that retiring principals weight highest. If a buyer fails on the three that matter most to you, it does not matter how well they score on the other seven.
The questions are not designed to make any single buyer look good or bad. They are designed to make every buyer's answers comparable, in writing, before you give up your right to talk to anyone else.
Related reading
- What to prepare before a first valuation call the data points to bring to a fifteen-minute first conversation.
- A clean structure, not a leveraged earn-out the 50/25/25 mechanics with worked examples.
- Why sell to Jack Ross why a direct sale to a chartered firm is different from the broker or PE routes.
- Private equity vs trade buyer the structural differences in how the two route categories operate.